Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—N.Y. Supp.: Vespa franchisee’s claims under the New York Dealer Act failed, (Dec 13, 2013)

By Linda O’Brien, J.D., LL.M.

A Vespa motor scooter franchisee’s claims against a Vespa motor scooter importer alleging violations of the New York State Franchised Motor Vehicle Dealer Act (Dealer Act), among other claims, were dismissed for failure to state a cause of action, the New York Supreme Court, County of New York has held (Schieffelin & Company, LLC a/b/a Vespa Soho v.Piaggio Group Americas, Inc., December 4, 2013, Sherwood, O.).

Piaggio Group Americas, Inc. was in the business of importing into the U.S. motor scooters with the Vespa brand, together with related parts and accessories. Schieffelin & Company, LLC was an authorized sales and service dealer of Vespa motor scooters. In 2006, Schieffelin and Piaggio entered into an authorized dealer sales and service agreement which granted Schieffelin the non-exclusive privilege to sell and service Vespa brand motor scooters and operate a Vespa dealership at one location in Manhatten. The agreement was for a term of three years.

In 2007, Schieffelin decided to sell its Vespa dealership. Schieffelin introduced a potential buyer, Andrew Hadjiminas, to the president and CEO of Piaggio and requested approval to sell the dealership to Hadjiminas. Piaggio consented to the sale and Schieffelin and Hadjiminas executed a letter of intent and confidentiality agreement. Schieffelin and Hadjiminas also entered into a separate non-compete agreement which provided that the purchaser would not use confidential information to circumvent or compete with the seller on a specific business opportunity, including an attempt to open a Vespa dealership other than the purchased business. After attempting to lower the purchase price, Hadjiminas terminated the letter of intent. Thereafter, Hadjiminas entered into a dealer agreement with Piaggio and opened a Vespa dealership in Brooklyn. Piaggio also entered into a dealer agreement with another entity, Hummer of Manhatten.

Schieffelin filed suit against Piaggio alleging violations of the Vehicle and Traffic Law of the Dealer Act, tortious interference with contract, and breach of good faith and fair dealing. Piaggio’s moved for summary judgment to dismiss the complaint.

Tortious interference with contract. Schieffelin claimed that Piaggio, having knowledge of the letter of intent, confidentiality, and non-compete agreements between Schieffelin and Hadjiminas, improperly procured the breach of such agreements by entering into a dealer agreement with Hadjiminas to operate a Vespa dealership in Brooklyn. In rejecting those claims, the court noted that Schieffelin’s proposed sale to Hadjiminas had terminated prior to Piaggio’s dealer agreement with him. Even if the non-compete agreement had remained in effect, there was no evidence that Piaggio knew of its existence. Additionally, Piaggio consented to the sale and there was no evidence to show that it engaged in any improper conduct to interfere with the proposed sale. The record clearly showed that the sale did not close due to a failure to agree upon price.

The Dealer Act. There was no evidence of violations of the Dealer Act because Schieffelin did not have an exclusive right to operate a Vespa dealership in Manhatten or the right to open one in Brooklyn, the court held. Piaggio’s actions in entering into the dealer agreements with Hadjiminas and Hummer of Manhatten could be not construed as improper or preventing Schieffelin from obtaining a fair price on the sale of his dealership. Moreover, Piaggio’s awarding of franchises to Hadjiminas and Hummer of Manhatten did not improperly restrict Schieffelin’s right to own and operate a Vespa dealership or reduce the value of his relevant market area since the Schieffelin’s dealer agreement with Piaggio was non-exclusive and limited to one location. Also, Schieffelin presented no evidence that Piaggio’s dealer incentives were discriminatory. Finally, Piaggio’s use of an internet marketing service to advertise discontinued and overstock Vespa motor scooters was not a sale to the public through non-Vespa franchise dealers since the vehicles were only sold and delivered to consumers at Vespa dealerships.

The case is No. 601778/2009.

Attorneys: Lance Grossman (Lance Grossman Esq.) and (Bellavia Blatt Andron) for Schieffelin & Company. (Squire Sanders LLP) for Piaggio Group Americas, Inc.

Companies: Schieffelin & Company.; Piaggio Group Americas, Inc.

Cases: FranchisingDistribution NewYorkNews